GROWERS who have sold wheat to the AWB pool look likely to be the big losers if the go-ahead is give

14 Dec, 2006 07:00 PM

But it¹s a scenario that the Wheat Growers Association (WGA) is aiming to torpedo, as the war over WA wheat continues to increase in ferocity.

WGA chairman Bob Iffla said he was absolutely disgusted by CBH¹s most recent application to export 2mt of WA wheat to its Asian flour mills.

CBH submitted its application to Federal Agriculture Minister Peter McGauran after being knocked back twice by the Wheat Export Authority last month. Mr McGauran was handed the power of veto after the damning Cole report into AWB¹s performance in the Iraq scandal.

Mr Iffla described CBH¹s move as a major threat to the single desk¹s future and called on growers to stand united against single desk opponents.

If Mr McGauran moves to veto the application, he will deny WA growers access to the $20/t premium that is being promised by CBH.

Or on the other hand, if he grants CBH an export licence, his decision could jeopardise returns for existing pool participants by diverting grain out of AWB¹s national pool.

It is also believed that AWB International will be at risk of defaulting on some of its forward selling program if 2mt were taken out of the pool, which would have severe implications on returns for those who have delivered their wheat to it.

Mr Iffla said the WGA planned to block CBH¹s wheat export bid by presenting a letter urging the company to withdraw its application.

Mr Iffla said if no action resulted form the letter he would present a signed petition to the CBH board later in the week calling for an emergency general meeting of the company.

He said the move was designed to protect the income and security of wheat growers, who felt cheated by recent changes to the single desk system that had been made mid-harvest, and were disappointed with CBH¹s attempts to poach wheat from the national pool.

Mr Iffla said he would have no trouble obtaining the 25 signatures required to call the emergency meeting and planned to use the forum to convince the CBH board to exercise commonsense and withdraw its bulk wheat export licence application.

³The single desk is under threat from CBH and this is the start of a war,² Mr Iffla said.

³We need to do something urgent about it and fight fire with fire.

³Approval for CBH¹s application to export 2mt of WA wheat would have dire consequences for the remaining pool participants.

³CBH is not listening to our concerns; they are sending the wrong signals, eroding the price of wheat by hatcheting it down and this organisation had no choice but to act.²

Mr Iffla said any reduction to the 4mt of wheat that was expected to be exported from Australia this year would force remaining pool participants to wear a higher portion of AWB¹s $39.5 million management fee.

³At the moment the pool management cost is likely to be around $10/t if there¹s 4mt in it, but at the end of the day if CBH¹s application is approved at 2mt then that cost is quite likely to double,² he said.

Mr Iffla said the cost to pool participants would also increase by $10/t if other companies were granted a bulk export licence and more wheat was taken out of the pool.

³There¹s around 1mt in it now, but the more that is taken out the higher the costs will be and the greater the burden will be on those people who have already committed their wheat to the national pool,² he said.

Mr Iffla said another issue confronting the national pool was the inability of AWB to service many of its long-term customers if CBH¹s bid was successful.

He said any reduction in wheat from the national pool would strip AWB of its ability to maintain long-serving relationships with key customers, who he said might be lost for good if they were let down this year.

³Next year is another year but this year all of AWB¹s customers want a slice of the cake,² he said.

³If CBH wants to put an application in next year then that¹s fine, but for heaven¹s sake we need some certainty this year and we can¹t afford to wait around too much longer.²

Despite Mr Iffla¹s plea, the Pastoralists and Graziers Association (PGA) had little sympathy for those growers who had already delivered their wheat into the national pool.

The PGA said the fee hike was unfortunate, but pointed out that AWB¹s recent behaviour had made the risks of pooling with the company crystal clear to all growers, especially in light of the difficult season.

PGA Western Graingrowers chairman Leon Bradley said AWB pool participants had made their own choice to deliver their wheat to the national pool in full knowledge of the circumstances.

Mr Bradley said those growers would have to live with the consequences of their decisions.

³It is the height of arrogance for disgruntled pool participants to drag other growers down with them,² Mr Bradley said.

³If they are dissatisfied with their decision to gift their wheat to AWB they should ask AWB for their wheat back.

³They will then find out that they do not own their wheat at all, and have forfeited all their rights.²

Mr Bradley said rather than criticising CBH and other private grain traders, pool participants should instead be asking some hard questions of the WGA and WAFarmers, whose leaders he said had failed to advise the industry of the true circumstances of the pool, while they themselves were not necessarily delivering to it.

Mr Iffla has said he was warehousing his wheat this season, but has supported that position by saying he would prefer to support the single desk by delivering his wheat to the national pool after the dust had settled.

Other growers have declared they will deliver their wheat to the national pool regardless of the consequences.

³Those growers that have made the prudent decision not to deal with AWB should now have the option of availing themselves of offers made by other grain traders, including CBH,² Mr Bradley said.

³For tonnages exceeding CBH requirements, further licences should be granted to interested parties.²

Mr Bradley said Mr McGauran had little choice on the matter and was now required to act in the best public interest under the amendment to the wheat marketing legislation.

³He must grant the licence (to CBH),² Mr Bradley said.



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